BRIGHTER MARKET

Dominion, Volume 25, Issue 91, 12 January 1932, Page 7

BRIGHTER MARKET

Steady Improvement in Empire' Slocks OPTIMISM REAPPEARS By Telegraph—Press Assn.—Copyright. London, January 10. During the first week of the New Year the Stock Exchange displayed a far more cheerful tone than has been apparent for some time past. A steady improvement in all glltedgeds has been followed by an upward movement in -most other stocks, even German, Austrian, and other European bonds, which recently have been very dull, showing striking recoveries, which must be attributed to a growing feeling of optimism regarding the prospects of satisfactory results being 'achieved at the Lausanne Conference. For Indian Government stocks there has been a good request, as a result of the Government’s strong action, which has done much to restore investors’ confidence. One of the brightest sections of the market is Dominion stocks, which mostly show appreciation. Australians are especially in favour, with hardening prices. New Zealands, on the other hand, weakened during last month. It is suggested In some quarters that this is due to sales by holders for reinvestment in Australians, which are still much cheaper than New Zealands, so such transactions are decidedly profitable. / Among the factors contributing to the improved tone of the Stock Exchange are the comparative steadiness of sterling exchange, hopes of a not far distant reduction in the bank rate, and the satisfactory balance-sheets of the “Big Five” Banks, which show only a moderate decline in profits and are considerably better than was expected. Difficulties Weathered. As the “Dally Telegraph" remarks: “Foreign observers of British financial affairs can hardly fall to be. deeply impressed by the way our great banking Institutions weathered the difficulties of a period of unparalleled disturbance and anxiety.” The immediate result of these good balance-sheets has been an all-round improvement in bank shares and a much brighter tone among industrials. Another wonderful balance-sheet is that of the F. W. Woolworth Company, sixpenny bazaar proprietors, whose profits for the year have risen by half a million to £4,211,000, enabling a distribution of a dividend equal to 634 per cent. Holders of shares in Australian companies received a crumb of comfort in the fact that Australian Pastoral resumed the payment of a dividend. They are hoping other similar companies will soon be able to follow the example. • The shipping trade unfortunately shows no signs of recovery, and the annual returns, analysed in “Fair Play,” are most depressing. A comparison of the values of the ordinary shares of the six leading companies, the Cairn Line, Cunard, Furness-Withy, IndoChina, Peninsular, and Royal Mail, shows a depreciation of no . less'than 774 per cent., compared with January 1, 1920. Steamers at Fancy Prices. "Fair Play” points out that in 1920 a large number of shipping companies came into existence and acquired steamers at fancy prices. Nearly all these have disappeared or are practically insolvent, as it has been impossible to earn sufficient to meet the enormous depreciation which has taken place, and the difficulties of some of the older companies have been caused by the high prices paid for ships during the period immediately following the war. A writer in “Lloyd’s Bank Review” takes a favourable view of the prospects of an improvement in sterling exchange. In a lengthy analysis of the position he points out that it is important to realise the pressure upon sterling due to the transfer of capital from England, both temporary and non-recurrent, for as soon as foreign funds held in England fall to the lowest practicable limit this pressure will automatically cease. Sterling fell during. the closing months of 1931 under pressure of nonrecurrent forces, which by now should have largely spent themselves. In these circumstances it is not unduly optimistic to look for a rally in sterling at least to its natural level. Even such general deductions as these are liable to be upset by unforeseen developments, both economic and political. All this analysis sekes to establish is that, judging from data available for the December balance, probability favours an early but limited appreciation of the pound. BANKS’ NET PROFITS All Results Now Disclosed Official Wireless. Rugby, January 9. All the “Big Five” banks of the British banking system have now disclosed their net profits and dividend recommendations for last year. The results in all cases, in accordance with expectation, are most satisfactory. The profits showed a moderate decline in such a-difficult year, but the dividends are maintained at the rates declared last summer, which were little lower than those of the previous year. z The directors follow the traditional policy of British bankers in writing down assets to conservative figures, reccurse being had for the purpose of the published reserves. Forward balances are maintained after a generous provision for contingencies.